Facebook beats earnings, but misses on revenue

·3 min read

Facebook's stock jumped marginally in after-hours trading Monday after the company beat Wall Street expectations on earnings per share but missed estimates on revenue.

Between the lines: Facebook warned investors last month that changes to Apple’s privacy rules would weigh on its business, and that warning helped the company dodge a big stock slide today.

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  • Snapchat's stock fell roughly 25% last week after it conceded that Apple’s changes were impacting its business.

Details: Facebook also announced new efforts to invest in areas outside of its core advertising business, including augmented and virtual reality.

  • Starting next quarter, Facebook says it will begin breaking out its VR/AR unit called Facebook Reality Labs (FRL) separately.

  • The company said that investments in Facebook Reality Labs will reduce its overall operating profit by roughly $10 billion in 2021.

  • Revenue and operating profit for the company's family of apps, including Facebook, Instagram, Messenger, WhatsApp and other services, will be reported separately from FRL, which includes AR and VR-reality related hardware, software and content.

  • Investments outside of advertising are proving critical to Facebook's long-term growth. Reports out Monday suggested that the tech giant is grappling with ways to retain younger users, which are a critical advertising demographic.

Yes, but: Facebook reported that for the first time in a year, the company actually added users in North America, which surely added to investor optimism.

By the numbers, per CNBC:

  • Earnings: $3.22 vs .$3.19 per share expected by analysts, according to estimates from Refinitiv

  • Revenue: $29.01 billion vs. $29.57 billion expected by analysts, according to estimates from Refinitiv

  • Daily active users (DAUs): 1.93 billion expected by analysts, according to estimates from StreetAccount

  • Monthly active users (MAUs): 2.93 billion expected by analysts, according to estimates from StreetAccount

  • Average revenue per user (ARPU): $10.15 expected by analysts, according to estimates from StreetAccount

The big picture: Facebook's stock bump suggests that investors aren't rattled by Facebook's current public relations crisis.

  • On Monday, dozens of news outlets released reports about the tech giant based on leaked whistleblower documents.

  • The stories suggested that Facebook has known about harms caused by its policies and products, but opted not to address them at the expense of the company's bottom line — an allegation the company vehemently denies.

  • Reports last week suggested that the company was considering a rebrand, but no such change was announced on Monday.

What's next: The company gave weaker-than-expected revenue guidance for the fourth quarter because of the Apple privacy changes.

  • "Our outlook reflects the significant uncertainty we face in the fourth quarter in light of continued headwinds from Apple's iOS 14 changes, and macroeconomic and COVID-related factors," the company said.

  • The company also said that it expects revenues from non-ad products — like hardware — to be down year-over-year, due to high comparisons to last year's heavy Oculus Quest 2 sales.

Go deeper ... Facebook's earnings over the past year:

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